The Fintech Association of Nigeria (FintechNGR) has engaged the Central Bank of Nigeria (CBN) as well as major stakeholders in the cryptocurrency industry to understand their perspectives on the placement ban on the currency.
The CBN had previously released a statement titled: ‘Response to Regulatory Directive on Cryptocurrencies’ and read: “The following reasons – (a) the volatility of cryptocurrency and the consequent inability of cryptocurrency to be used as a lasting means of payment; (b) the anonymity associated with cryptocurrency transactions; (c) that “cryptocurrencies are not backed by any real assets or fundamentals” and as a result could crash in value; and (d) promotion of illegal activities such as money laundering, terrorism ﬁnancing.”
Reporting to the CBN statement, FintechNGR noted the decision will further limit the federal governments drive to diversify revenue-earning sources with the gloomy global economy.
The association also pointed out that the prohibition will make a lot of people involved in cryptocurrency transactions to go underground.
According to the body, “The CBN should adjust/adapt its existing regulatory instruments to ﬁt the highly innovative cryptocurrency sector. This adjustment/adaptation should strike a balance between protecting the people from the dangers of cryptocurrencies and harnessing the beneﬁts of these cryptocurrencies.
“The CBN or Securities and Exchange Commission (“SEC”) should reach an agreement as regards the regulatory authority that will regulate cryptocurrencies. They should also consider approving cryptocurrencies that have achieved global acceptance like Bitcoin, stablecoins, and other Altcoins.
Speaking further about agencies that can be involved in its proposed regulatory call, FintechNGR explained that consideration should be given to the role of the National Information Technology Development Agency (“NITDA”) with respect to data protection in the cryptocurrency space.
It noted that the NITDA is charged with the mandate to create a framework for the planning, research, development, standardization, application, monitoring, evaluation, and regulation of Information Technology practices in Nigeria, NITDA views blockchain technology as one of the emerging technologies that Nigeria should leverage for global competitiveness.
Citing other possible means, the body said CBN might also consider registering and designating locally and globally renowned cryptocurrency exchanges with proven KYC and compliance capabilities as legitimate places for Nigerians to trade cryptocurrency.
According to the association, this way, entities dealing with cryptocurrency can be known and licensed accordingly.
It also called the central bank communicates with stakeholders and highlights specific ways they would like their concerns to be addressed. This will enable both stakeholders to work together to regulate the cryptocurrency market effectively.
FintechNGR added: “CBN should consider developing and testing a Central Bank Digital Currency (CBDC). CBDC is a digitally represented version of the country’s sovereign currency, in this case the Naira, issued and backed by the Central Bank.
“CBDC could impact monetary policy favorably by providing a new tool for the Bank to apply and implement monetary policy with enhanced speed and improved efﬁciencies.
“If the Bank determined that CBDC should be interest bearing, this remuneration feature would likely increase the accumulation and use of CBDC for direct payments by and between individuals and retail businesses as the wallet holders of CBDC. Some countries have started experimenting and testing CBDC’s.”